Data from the U.S. Census Bureau and the Department of Housing and Urban Development, with information from the latest National Association of Home Builders (NAHB) survey, reveals a mismatch between home prices and prices that buyers expect to pay.
According to the NAHB, the median-sales price of single-family homes at the start of 2018 was under $322,000. Around 73% of those homes were priced between $250,000 and $1 million. Just 3% were less than $150,000 and none for under $100,000.
However, the 2019 NAHB survey, “What Homebuyers Really Want,” shows that the average price buyers expect to pay is about $254,000. Less than half expect to pay $250,000 to $1 million. Also, 27% are looking to pay less than $150,000 and 12% want to pay less than $100,000.
“Factors such as the ongoing shortages of labor and lots, and escalating regulatory costs have made it difficult to impossible to produce a new home at these lower price ranges,” the report states. “This obviously is forcing a significant share of buyers into the market for existing homes only.
“However, the market for existing homes has been very tight recently.”
The National Association of Realtors reported that the supply of existing homes has been consistently been under 4.5 for more than two years.
CoreLogic reported in August that the number of for-sale homes in June rose to a 3.3-month supply, as rising home prices and economic expansion have caused affordability to drop.
June’s reported number is a year-over-year increase from the 2.8-month supply in June 2018. Home supply peaked in 2008, but fell due to the effects of the Great Recession.
When broken out by price tier, the lowest-priced homes had a 3.5-month supply in June, which rose three months from last year, but just one-third of its peak in January 2008. The low-to-middle-price tier saw an annual increase of 2.2 months in June.
Homes aren't lasting long on the market as demand is rising. CoreLogic reports that the volume of homes selling within 30 days of listing is at its highest level since 2000. Homes sold within 30 days of listing in June was 26.2% higher than the pre-crisis peak of 20.8%, which was set in August 2004.